Four US cities where homeowners are set to suffer worst house price crashes this year – see if yours is on the list

AFTER an unpredictable few years, Americans may see housing prices and affordability decline.

Goldman Sachs strategists are now predicting a harsher outlook on the housing market – specifically in four cities.

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The large bank sent a note to clients earlier this month detailing how Austin, Phoenix, San Diego and San Jose are likely to major declines in home prices.

Patrick Duffy, founder and chief economist of MetroIntelligence, told The U.S. Sun that Americans should expect to see larger declines in home prices where the median home prices are disconnected from local incomes.

This means that homeowners or renters are not making as much money to keep up with sale prices.

“This would be especially true as work-from-home policies gradually fray along with higher unemployment levels in the tech sector,” Patrick said.

While most of Patrick’s data is on par with Goldman Sachs regarding the California areas, his models don’t see Austin, TX having the same potential price declines for three reasons:

• It’s payment-to-local income ratio is under 40 percent, so perhaps its price decline may be closer to 10 percent
• It’s rent-to-local income ratio is under the national average, allowing renters more room to save for a down payment
• I expect it to be one of the more resilient due to better-than-average demand, supply and financials

WHAT’S BEHIND THE DECLINE?

While many factors may be the cause of falling home prices, one large element stands out – mortgage rates.

Last year, the Federal Reserve hiked interest rates seven times in an effort to bring down rising inflation.

This makes borrowing more expensive and may cause sellers to reconsider listing their homes and buyers to wait for prices to drop.

In fact, adults planning to purchase a home in the next year has dropped to 13 percent in the final quarter of 2022, according to Eye on Housing, an association discussing economics and housing policy.

These higher mortgage rates mixed with low inventory have caused existing home sales to decline for an eleventh consecutive month as of December.

PREPARING FOR DECLINES

If you’re a seller in this market and must list your home, there are a few ways to make sure you get what you feel your home is appropriately worth.

Firstly, be realistic about pricing your home versus the competition.

While it’s okay to test the market, make sure you’re ready to adjust accordingly and quickly.

Appraisals can be a great indicator of what your selling price should be as these tend to account for comparable properties.

It will note things like square footage, age of the home, location, upgrades, nearby amenities, and other data to accurately calculate your home’s value.

Next, don’t forget about curb appeal.

This means maintaining, upgrading the interior, or even staging the home if that’s within your budget.

Lastly, it may be a good idea to hire a top real estate agent as they are likely to have a wide variety of clients to show your property to.

Plus, they will have more experience in how to properly market your home and help in negotiations that could lead to higher sale prices and a quicker home sale.

The U.S. Sun reveals the top five most and least affordable places to live.

Plus, here’s why the Fed hiked interest rates seven times last year.